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TMI Blog2019 (7) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... registered before the sub registrar without disputing the stamp duty for valuation of the land of Rs. 2,60,05,348/-." 3. Briefly stated, the assessee, an individual, sold immovable property located at Paldi, Ahmedabad for a consideration of Rs. 51 Lakhs vide sale deed registration with registered authority on 19.10.2011. It was found by the AO that stamp duty of Rs. 12,74,440/- was collected on the aforesaid sale. The market value of the property was determined by the registering authority at Rs. 2,60,05,348/-. The AO also noticed that no income by way of capital gains was declared by the assessee in the return of income filed under s.139 of the Act. In the light of alleged under valuation of the property by Rs. 2,09,05,348/- and non-declaration of capital gains, the case of the assessee was reopened by invoking Section 147 of the Act. In the course of re-assessment, the assessee filed revised computation of total income declaring the amount of Rs. 3,42,036/- as long term capital gains on the aforesaid transaction of sale of land. It was claimed by the assessee that land was acquired prior to 01.04.1981 and the fair market value of the property stands at Rs. 6,06,110/- and conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO, the assessee preferred appeal before the CIT(A). 5. The CIT(A) took note of the copy of electricity bills in the name of the illegal trespassers, MOU dated 04.02.2014 between the purchaser and the trespassers for vacating land, photographs of the illegal occupation of land by hutments and came to the conclusion that only real income is required to be taxed. The CIT(A) accordingly directed the AO to consider the chargeable long term capital gains at Rs. 3,42,036/- as claimed by the assessee as against Rs. 2,09,13,053/- computed by the AO. The relevant operative para of the order of the CIT(A) is reproduced hereunder: "4. Decision: I have gone through the facts mentioned in the assessment order and the submission filed by the appellant carefully. The Assessing Officer has mentioned about his show cause, appellant's response and non' acceptance of explanation in para 5 onwards assessment order. I have perused PP 01-206/PB in wherein the appellant has clearly raised objection to the proposed addition, the appellant has tried to defend through various arguments. Firstly, it was submitted that the plot of land was having illegal encumbrances and the appellant filed MO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-plots, one being of appellant and another being of Shashank Indulal Shah & others. I find that there are illegal encumbrances in the part of the sub-plot belonging to Shashank Indulal Shah & others as per information filed before AQ. Hence it can clearly be concluded that in all likely hood, there have been illegal occupants of the sub-plot belonging to the appellant. Secondly, the appellant has raised technical infirmities of the addition so made by highlighting provisions of sub section (2) of section 50C. The submission of the appellant 11/03/2016 has been reproduced in Para 7 of assessment order. The relevant portion from page 6/7 of assessment order is reproduced as under: "5. The copy of registered agreement to sale dated 18/08/2011 in respect of adjoining plot is enclosed herewith. In said document the rate per square meters is Rs. 3463.10(Rs. 72,00,000/- divided by 2079.01 (Rs. 51.00.000/- divided by 1465.09 square meter). The assesses has got higher sale consideration. All the plot of survey no, 309 of TP scheme 6, Final plot no. 12 have illegal occupiers. Therefore the sale price received by the other neighbours may be considered as final sale consideration. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T vs. Smt. Raj Kurnar Vimla Devi and another (2005) 279 ITR 360 (All.) (c) CIT vs. Chandani Bhochar (2010) 323 ITR 510 (PGBPH), (d) N. Meenakshi 226 CTR 625 (Mad.), (e) Mohd. Shoib vs. DCIT (2009) 29 DTR 306 (ITAT Lko), (f) Meghraj Baid vs. ITO (2008} 114 TTJ 841 (Jodh.), (g) Ajmal Fragrances & Fashions (P) Ltd. vs. CIT (2009) 34 SOT 57 (Mum.), (h) (h)Nandita Khosla 11 Taxmann.com 344, (i) Shaik Mohidden vs, ITO (2009) 123 TTJ 411(Chennai), (j) ITAT Delhi in case of ITO vs. Manju Rani Jani 24 SOT 24, (k) ITAT Lucknow in case of Jitendra Mojhan Saxena 117 TTJ 974 (Trib. Luck.) and (l) ITAT Mumbai in case of Kalpataru Industries vs. ITO-ITA No. 5540/Mum/07 dated 24-08-2009, I have gone through the judgements relied by the appellant. Hon'ble Calcutta High Court decision in the case of Sunil Kumar Agrawal Vs. CIT-372 ITR 83 (Cal.), has held that reference to DVO was mandatory and the relevant portions of judgment is reproduced hereunder: "7. We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assesses was relying. Presumably, the case of the assesses was that price offered by the buyer was the highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Kol.) It is understood that the appellant raised objections to considering the Stamp Duty Valuation as total sale consideration and the AO failed to send the matter for valuation to DVO as per provisions of section 50C(2). To my mind the AO overburdened himself with avoidable responsibility by not sending the issue for expert opinion to the DVO as per specific provisions of sub section 2 of section 500 of IT Act, 1961. The appellant has made out a strong case for herself both on facts and on legal stance. Therefore I am convinced that appellant income cannot be taxed higher than the amount which has been disclosed in Return of Income. It need to be clarifjed that the appellant has considered sale consideration of Rs. 51,00,000/- of the plot of land involved and declared total income of Rs. 3,42,036/- and paid taxes of Rs. 78,404/- during the assessement proceedings before the AO. The appellant's letter datedl9/10/2015 addressed to ITO Ward-3(3)(9) is placed on record. Hon'ble Karnataka High Court in the case of Shankar Khandsari Sugar Mills Vs. CIT 193 ITR 669 (Kar.) has observed that "In the absence of any prejudice to the revenue, and the basis of the tax under the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) towards sale consideration, the Revenue preferred appeal before the Tribunal. 6.1 The learned DR for the Revenue relied upon the order of the AO and submitted in furtherance that provisions of Section 50C of the Act is plain and unambiguous. The assessee has admittedly declared lower consideration at Rs. 51Lakhs as against the market value in terms of Section 50c of the Act determined by registering authority at Rs. 2,60,05,349/-. The contractual agreement by way of sale deed between the assessee and the purchaser clearly suggests that the possession of the property given to the purchaser was vacant and peaceful without any reference to the alleged encroachment and other title defects. The learned DR accordingly submitted that in view of the express provision of Section 50C of the Act, the deemed value of sale consideration is required to be replaced by the so called actual price fixed on sale of property, more so, where the assessee has not disputed the stamp duty valuation at any stage. The learned DR accordingly submitted that the action of the CIT(A) is not in consonance with the provisions of Section 50C of the Act and therefore requires to be set aside and the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration received on sale of the property. It is primarily the case of the assessee that the lower consideration received on sale of property is attributable to the encumbrances, encroachment and defect in vacant possession of the property. The assessee has demonstrated the encroachment by illegal occupiers with reference to electricity bills in the name of the illegal occupiers and substantial payment of Rs. 1,75,00,000/- in aggregate to various such occupiers by the purchaser in the subsequent years. This fact of payment towards encroachment has not been disputed by the Revenue. Therefore, there is no reason to exclude such amount for the purposes of computation of capital gains. Thus, the purchase consideration together with costs towards obtaining vacant property should stand at Rs. 2,26,00,000/-. The assessee however has failed to explain as to why the difference between deemed sale consideration of Rs. 2,60,05,348/- adjusted purchase costs and Rs. 2,26,00,000/- being Rs. 34,05,348/- should not be subjected to capital gain tax in the light of Section 50C of the Act. The brokerage costs incurred on sale consideration by the purchaser cannot be taken into account for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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